Economic Indicators pumps out fuel prices

It would be logical that if oil prices are going down, the price of fuel should follow suit, but that’s not the case. In fact, of late, it is the opposite. Tonight we look at historical data of the world price per barrel of West Texas Crude; fuel acquisition costs and pump prices for the period January 2000 to August 2012 to explain why when the price of oil falls, the price of fuel at the pump remains high. In this segment, we will focus on government taxes which add up to almost thirty-four percent of the pump price. In recent scenarios in 2012, the data shows that when the price of oil decreased, the government share of taxes went up. Simply put:  Downward oil prices present the ideal opportunity to sustain higher profit margins. It compensates for the times when oil prices are high and hence profit margins are low.  And for a cash-strapped government, it is revenue desperately needed.

After the last surge in the price of crude above US one hundred dollars in March to May 2011 and February to May 2012, the price of crude has been fluctuating below a hundred US dollars, but the price at the pump in Belize has been steadily rising with each shipment.  In another instance, on October seventh, 2012 the price per barrel of crude was at US eighty-nine dollars, while the pump price for premium fuel was just above thirteen Belize dollars.  The analysis shows that there is a huge difference between the world crude price in relation to the pump price. In another scenario, a large spike in pump price is recorded between July 2012, but the price of crude did not significantly increase.

Now let us look at the difference between landed costs in relation to price at the pump for 2012. This other huge difference shown by the high prices at the pump reflects additional charges on the imported fuel namely: GOB Taxes and the total commercial charges.  This includes direct taxes levied on imported fuel that includes GST since 2012.  Again, the analysis shows a large difference between the landed cost for premium fuel and pump price in Belize.  The data also shows that clear landed costs decreased whereas the prices at the pump significantly increased. Overall, the large portion of government taxes imposed on imported fuel is huge and Government is raking in the added value at the pump as revenue rather than passing it on to consumers.